MS.MANSI MUKESH NAGDA,MUMBAI vs. ACIT 17(2), MUMBAI

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ITA 2272/MUM/2018Status: DisposedITAT Mumbai03 December 2019AY 2010-113 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee consistently offered short-term and long-term capital gains in the past without dispute. It also noted the assessee maintained separate portfolios for speculative and investment activities and took delivery of shares, making the jurisdictional High Court's decision in Gopal Purohit applicable.

What were the facts?

The Assessing Officer treated the assessee's short-term capital gains from share transactions as business income, citing the high volume and short holding periods of the shares. The CIT(A) upheld this decision.

What were the issues?

Whether short-term capital gains from share transactions, despite delivery and consistent past treatment as capital gains, should be classified as business income due to frequent trading.

Which sections of the Income-tax Act were involved?

Not explicitly mentioned in the provided text, but the core issue relates to the classification of income.

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” Bench, Mumbai

Before: Shri Mahavir Singh (JM) & Shri Shamim Yahya (AM)

For Appellant: Dr. P. Daniel
For Respondent: Shri Akhtar H. Ansari
Hearing: 19.09.2019Pronounced: 03.12.2019

Per Shamim Yahya (AM) :- This appeal by the assessee is directed against the order of learned CIT(A) dated 25.1.2018 and pertains to A.Y. 2010-11.

2.

The issue raised is that learned CIT(A) erred in confirming the order of Assessing Officer in treating short term capital gains of Rs. 33,11,542/- as ‘business income’.

3.

The assessee is in this case is an individual and his nature of business has been referred as investor in shares and securities. During the course of assessment the Assessing Officer noted that perusal of the return of income shows that apart from a small income from other sources, the assessee has reported short term capital gain and long term capital loss on shares transactions and speculation loss. The Assessing Officer observed that total income of assessee constitutes mainly of short term capital gains on share transaction. He found that it was quite high. He noted that this short term capital gain was on account of transaction carried out involving purchase of 2 Ms. Mansi Mukesh Nagda shares for Rs. 2,49,99,195/- and sale thereof at Rs. 2,83,86,986/- during the year. That a total of 2,02,938 scrips split out of 134 companies that were sold during the year. That barring a small percentage of such transactions the holding period in these cases varies from one day, four days, one week and fourteen days and the average holding period is around 10-11 days. The Assessing Officer opined that the assessee’s activity was in the nature of in the nature of business. He further noted that the assessee has also carried out non delivery based speculative transactions during the year. Dividend received was very miniscule. That opening stock and closing stock of business did not comprise of some scrips. He proceeded to hold that short term capital gain was to be treated as ‘business income’’. In this process the Assessing Officer also held that the decision of Hon'ble Jurisdictional High Court in the case of Gopal Purohit (122 TTJ 97) is not applicable on the facts of the present case.

4.

Upon assessee’s appeal learned CIT(A) upheld the action of the Assessing Officer. Against this order assessee is in appeal before us.

5.

We have heard both the counsel and perused the records. We find in this case the assessee has been offering short term and long term capital gain consistently in the past. This has never been disputed by the Revenue. It is also undisputed that the assessee as an investor has maintained two separate portfolios one for the speculative and other one of investor. The Assessing Officer has treated as investor to the extent of long term capital loss on shares. Furthermore it is undisputed that the assessee had taken delivery of shares on its purchase and given due delivery of the shares on its sale. In these circumstances, in our considered opinion decision of Hon'ble Jurisdictional High Court in the case of Gopal Purohit (supra) is squarely applicable on the facts of the case. In our considered opinion the authorities below have clearly erred in distinguishing this case. Accordingly, we set aside the orders of authorities below and decide this issue in favour of the assessee.

3 Ms. Mansi Mukesh Nagda

6.

In the result, this appeal of the assessee stands allowed.

Order has been pronounced in the Court on 03.12.2019.

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